(Reuters) - Toshiba Corp said on Thursday it had clinched an agreement to sell its claims in bankrupt U.S. nuclear plant maker Westinghouse Electric Co LLC in a deal that would add $3.7 billion to the Japanese owner’s depleted capital base.

The Japanese conglomerate has also agreed to transfer its Westinghouse-related shares to Canada’s Brookfield Business Partners (BBU_u.TO), which earlier this month agreed to buy the unit for $4.6 billion - money that will be used to repay the nuclear plant maker’s creditors.

These deals could help clear Westinghouse’s path out of bankruptcy before Toshiba’s financial year ends in March, while also allowing the Japanese firm to resolve its negative net worth and stay listed on the Tokyo Stock Exchange.

Toshiba said in a statement that it would sell its claims against Westinghouse to a group of hedge funds led by the Baupost Group, and that the deal that would contribute about 410 billion yen ($3.68 billion) to its capital base.

The deal, first reported by Reuters earlier in the day, will make the group of hedge funds Westinghouse’s biggest creditor, helping cut down the fights among several creditors that had threatened to slow down the resolution of the bankruptcy.

The group led by Baupost has already bought claims worth more than $2.2 billion from Scana Corp, a South Carolina utility that contracted Westinghouse to build two reactors.

FILE PHOTO: The logo of the American company Westinghouse is pictured in Le Bourget, near Paris October 14, 2014. REUTERS/Benoit Tessier/File Photo

The South Carolina project, and another in Georgia, went billions of dollars over the fixed-price contract, forcing Westinghouse into bankruptcy in March.

Westinghouse’s bankruptcy pushed Toshiba into a crisis and prompted Toshiba to sell its memory chip business for $18 billion to shore up its balance sheet. The Japanese firm also forecast a negative net worth of 750 billion yen at end-March.

But finances are set to be shored up by the Baupost deal, which includes an after-tax profit of about 170 billion yen from the sale of claims and tax benefits of about 240 billion yen, Toshiba said. It added the company would promptly announce any revised forecasts as appropriate.

Toshiba shares rose as much as 2.9 percent in early trade on Thursday, and was flat at around 0443 GMT, while the Nikkei was up 0.46 percent.

Pittsburgh-based Westinghouse, which traces its roots to the 19th century, was acquired by Toshiba in 2006 for $5.4 billion at a time of increased interest in cleaner fuel sources.

In recent weeks, Citibank N.A. on behalf of the Baupost group of hedge funds has claimed it is owed as much as $7.5 billion by Westinghouse, alleging among other things gross negligence. The allegations are based on the South Carolina claims that the Baupost group has acquired.

Westinghouse disputed the new claims and said it threatened to delay the resolution of the case.

($1 = 111.4100 yen)

Reporting by Tom Hals in Wilmington, Delaware and Jessica DiNapoli in New York; Additional reporting by Chang-Ran Kim and Minami Funakoshi in Tokyo; Editing by Leslie Adler and Himani Sarkar